What is the CARES Act?
Coronavirus Aid, Relief and Economic Security Act (CARES Act) was enacted on Friday, March 27, 2020. The CARES Act provides aid and assistance to individuals and business as the country deals with the coronavirus pandemic. This over $2 Trillion economic relief package is designed to help individuals, families, business, nonprofits and healthcare workers and providers. There are other changes that are outlined in the CARES Act, but we are focusing on retirement and annuity account related questions.
Below are high-level FAQs that provide an initial overview of some of the key changes outlined in the Act. For in-depth details regarding the CARES Act, click here. As always, you should consult with your personal tax advisor regarding your own situation.
What impact does the CARES Act have on retirement accounts?
The CARES Act includes several provisions that make temporary changes to the federal laws governing retirement accounts:
- Waiving all Required Minimum Distributions (RMDs) from IRAs (including inherited IRAs) and qualified annuity retirement saving plans in 2020
- Penalty-free withdrawals up to $100,00 per person for qualified individuals* from IRAs and qualified annuities, including those under age 59 1/2 and who are normally subject to a 10% penalty. These withdrawals are eligible for flexible taxation and repayment options not generally available for retirement savings distributions. Contact your tax advisor for more information on the flexible taxation.
*A qualified individual is someone who has been diagnosed with COVID-19, is the spouse or dependent of someone who was diagnosed, or has had adverse financial consequences as a result of the COVID-19 pandemic.
How does the CARES Act impact my RMDs?
All RMDs have been waived for 2020, including Inherited RMDs, however you may still take distributions from your retirement accounts.
How do I waive my 2020 RMD?
Degree of Honor IRA holders subject to RMD will receive a letter in the month of June that includes instructions to follow for waiving the 2020 RMD. Otherwise you can follow the online directions:
It only takes a few minutes to waive your automatic withdrawal of your 2020 RMD. Download and complete Parts 1 and 2 of the Waiver Election Form and mail it back to Degree of Honor, Attn: Member Services, 1100 W. Wells Street, Milwaukee, WI 53233
A separate waiver must be made for each IRA you own.
Will this affect my 2021 RMD?
No, as long as you have already elected our Automatic RMD Option it will continue as originally scheduled in 2021.
I already took my RMD for 2020. Is there a way to put the money back in?
You may be able to roll the RMD amount you have taken so far in 2020 back into your IRA, however, the 60-day rollover rules and the IRA-One-Rollover-Per-Year-Rule may still apply. Please consult you tax advisor for more details.
Does the CARES Act impact non-qualified deferred annuities as it does for qualified retirement accounts (IRAs)?
The CARES Act does not apply to non-qualified deferred annuities.
During these challenging times, we want you to know that Degree of Honor is Always With You. If you are affected by COVID-19, have questions about the CARES Act or are having difficulty making payments related to your Catholic Financial Life policy, please contact us at 1‑800‑927‑2547.